FWIW
I just stumbled into another "gotcha" on brokered CD's. So I've been buying more and more CD's that pay interest (coupon frequency) on a monthly basis rather than at maturity... So far they have been paying off like a slot machine. Right on time and for the exact amounts I have calculated.
That is until now....I have one with a bank in North Carolina (through Schwab) and the first payment was due Sunday 5/14/23. So I expected to see my account credited by Monday 5/15/23. But nothing....
Okay so I call my AE at Schwab and he looks into it and tells me that Schwab doesn't credit accounts until they receive payment from the issuing banks. Well that makes sense but how can a bank delay making payments...
Isn't that default or at least a violation of the CD agreement. Well as he dug further, it seems this is not rare. According to their contracts, the issuing banks have up to 2 weeks to make interest payments after the coupon date. (Well nobody told me and it's never happen to me, but now I know)... Sounds like a good way for a bank to "float" a lot of money....
So don't be surprised when an interest payment is due or your CD reaches maturity, it may be a few more weeks before you get your money...
Have a nice day.